Many technical sales representatives have encountered a last-minute request from B2B prospects to "do a little better" on pricing. It may feel tempting to immediately ask your boss if you can reduce the rates clearly stated on your website.
However, reducing your price upon request means devaluing your product. It means you're competing on price, which Inc.'s Erik Sherman highlights is an ineffective marketing tactic. Join us as we review three ways companies can avoid the undercutting battle with prospects without losing the sale.
Often, when prospects request a price cut, they mention your competitors' pricing. One of the easiest ways to redirect the conversation away from money is to mention your features. Your competitor may be offering a rate that's slightly lower each month.
However, they don't offer the same 24/7 customer support or extreme customization. Understanding how your product stacks up to the competition regarding features is an important tool for salvaging relationships with prospects trying to undercut your product.
McKinsey research has found that customers don't make decisions on price. They purchase based on perceived value, defined as the benefit per dollar spent. By turning a conversation with an undercutting prospect back to value, you can justify your existing price structure.
Apple is just one example of a brand that has very successfully built a business competing on value as opposed to price. While their products are typically costlier than their competition, their marketing messages have successfully justified the higher costs.
Consumers who buy Apple products know they're paying for ease of use, security, and quality. If you're asked to drop your pricing, discuss why your brand charges a bit more than your competition in terms that emphasize the benefit to your customers.
It may feel easy or even automatic to think your sale is lost if a customer asks for a lower price. While a small percentage of customers may legitimately be dealing with a tiny budget for technology acquisitions, the majority are just doing due diligence. If you have flexibility in your pricing structure, why not take advantage of it?
Understanding your customer's position places sales representatives as prospect advocates. Be clear that you're not able to drop your pricing, but you're happy to help them find a solution that fits their budget. Most of the time, you'll still be able to salvage the sale.
Undercutting your product's pricing devalues your brand. By displaying empathy, discussing the value, and highlighting features, you can still close deals with prospects who have asked for a lower price.
Related articles: What is sales enablement?
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